3.21.2009

The Real March Madness


So let me get this straight. We're in the middle of the worst financial crisis in 75 years. Congress decides to extend a bailout to AIG because of the central role it plays in our financial system. It allows "please stay" bonuses so AIG can have some ammo in stemming the exodus of its best and brightest at a time of maximum stress and maximum scrutiny. Then, when those bonuses are triggered, public rage moves Congress to grandstand about how treasonous it is to take that money.

Even worse, Congress then passes a 90 percent (!) tax on either bonuses or anything over $250,000 in household income, which probably covers hundreds if not thousands of decent AIG workers and their families who were already wondering whether it was worth to hang in there and try to turn this thing around. Meanwhile, Treasury still hasn't filled most of its top positions and no one seems to appreciate the fact that the entire global financial system is in disarray.

I admit I have no idea what we need to do to fix this. But I sure as heck know that it can't involve creating a massive disincentive for the very people who have the skills to get us going again. I'm also pretty sure that reactionary and over-reaching legislative actions spawned by media frenzy and public rage are both bad policy and bad business. I'm also quite certain that people who are vilified and threatened and then who are made to return to the US government 90 percent of their extra effort will be impaired in giving their best to this cause.

[Links courtesy of Marginal Revolution.]
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